The ZIRP (zero interest rate policy) of the Fed led to the so-called zero lower bound problem, which refers to the problem of:
A) Having a very low level of employment with zero new jobs created
B) Huge budget deficits leaving the government no more ability to spend
C) Interest rates that can't go any lower, i.e. they cannot be driven down below zero
D) Zero real-GDP growth due to very weak aggregate demand

Question

Quizplus · Accepted Answer

The zero lower bound problem refers to the problem that interest rates cannot be driven down below zero, which limits the ability of central banks to stimulate the economy through monetary policy. This is a result of the ZIRP (zero interest rate policy) of the Fed.

The ZIRP (Zero Interest Rate Policy) of the Fed Led